The JSE’s Sustainability Disclosure Guidance document, released in December, is a welcome addition to the corporate governance space. But some express concern that its provisions are not mandatory
Not much good comes out of the JSE in December. It’s a month for treading water; a month when price movements are muted or going significantly in the wrong direction. It was, after all, in December 2017 that Steinhoff’s board made its historic"accounting irregularities" understatement. It was in December — the very same December, in fact — that Sekunjalo pulled off the brazen listing of Ayo Technology Solutions, taking the clients of the Public Investment Corp for a long R4.3bn ride.
Generally, it has been well received by the investment community: most acknowledge the balancing act the JSE has pulled off by aligning its recommendations with global best practice while adding a critical local flavour. JSE chief sustainability officer Shameela Soobramoney says the bourse was getting frequent requests for help from companies trying to navigate this rapidly evolving landscape. There was a sense they were being overwhelmed by dire warnings on so many fronts; most realised they had to do something, but weren’t sure what.
Not everybody is pleased that there are no plans at present to convert the substance of the guidance into listing requirements. The former is championed by global financial establishment players such as the Financial Stability Board , international accounting standards setter the International Financial Reporting Standards Foundation, the World Economic Forum and the"big four" audit firms .
Hanks believes effective sustainability disclosure has to address both aspects — hence double materiality.Disclosure Guidance, a document released separately in early December, the JSE describes the list of disclosures that should be included in financial reports when deemed financially material. It refers to the comprehensive checklist produced by the Task Force on Climate-related Financial Disclosures .
The ISSB is developing"a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs". It expects to release TCFD-supported standards for comment later this year. Better still — possibly the best part of the document — is the wide range of sustainability metrics it lists. For those weary of the box-ticking mentality that has come to dominate corporate governance, the really good news is that these are not principles or recommendations; they are measurable aspects of the company’s overall governance.
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